Saturday, December 10, 2011

The hopeful continent

Africa rising

After decades of slow growth, Africa has a real chance to follow in the footsteps of Asia

THE shops are stacked six feet high with goods, the streets outside are
jammed with customers and salespeople are sweating profusely under the
onslaught. But this is not a high street during the Christmas-shopping
season in the rich world. It is the Onitsha market in southern Nigeria,
every day of the year. Many call it the world’s biggest. Up to 3m people
go there daily to buy rice and soap, computers and construction
equipment. It is a hub for traders from the Gulf of Guinea, a region
blighted by corruption, piracy, poverty and disease but also home to
millions of highly motivated entrepreneurs and increasingly prosperous
consumers.

Over the past decade six of the world’s ten fastest-growing countries
were African. In eight of the past ten years, Africa has grown faster
than East Asia, including Japan. Even allowing for the knock-on effect
of the northern hemisphere’s slowdown, the IMF expects Africa to grow by
6% this year and nearly 6% in 2012, about the same as Asia.

The commodities boom is partly responsible. In 2000-08 around a
quarter of Africa’s growth came from higher revenues from natural
resources. Favourable demography is another cause. With fertility rates
crashing in Asia and Latin America, half of the increase in population
over the next 40 years will be in Africa. But the growth also has a lot
to do with the manufacturing and service economies that African
countries are beginning to develop. The big question is whether Africa
can keep that up if demand for commodities drops.

Copper, gold, oil—and a pinch of salt

Optimism about Africa needs to be taken in fairly small doses, for
things are still exceedingly bleak in much of the continent. Most
Africans live on less than two dollars a day. Food production per person
has slumped since independence in the 1960s. The average lifespan in
some countries is under 50. Drought and famine persist. The climate is
worsening, with deforestation and desertification still on the march.

Some countries praised for their breakneck economic growth, such as
Angola and Equatorial Guinea, are oil-sodden kleptocracies. Some that
have begun to get economic development right, such as Rwanda and
Ethiopia, have become politically noxious. Congo, now undergoing a
shoddy election, still looks barely governable and hideously corrupt.
Zimbabwe is a scar on the conscience of the rest of southern Africa.
South Africa, which used to be a model for the continent, is tainted
with corruption; and within the ruling African National Congress there
is talk of nationalising land and mines.

Yet against that depressingly familiar backdrop, some fundamental numbers are moving in the right direction.
Africa now has a fast-growing middle class: according to Standard Bank,
around 60m Africans have an income of $3,000 a year, and 100m will in
2015. The rate of foreign investment has soared around tenfold in the
past decade.

China’s arrival has improved Africa’s infrastructure and boosted its
manufacturing sector. Other non-Western countries, from Brazil and
Turkey to Malaysia and India, are following its lead. Africa could break
into the global market for light manufacturing and services such as
call centres. Cross-border commerce, long suppressed by political
rivalry, is growing, as tariffs fall and barriers to trade are
dismantled.

Africa’s enthusiasm for technology is boosting growth. It has more
than 600m mobile-phone users—more than America or Europe. Since roads
are generally dreadful, advances in communications, with mobile banking
and telephonic agro-info, have been a huge boon. Around a tenth of
Africa’s land mass is covered by mobile-internet services—a higher
proportion than in India. The health of many millions of Africans has
also improved, thanks in part to the wider distribution of mosquito nets
and the gradual easing of the ravages of HIV/AIDS. Skills are
improving: productivity is growing by nearly 3% a year, compared with
2.3% in America.

All this is happening partly because Africa is at last getting a
taste of peace and decent government. For three decades after African
countries threw off their colonial shackles, not a single one (bar the
Indian Ocean island of Mauritius) peacefully ousted a government or
president at the ballot box. But since Benin set the mainland trend in
1991, it has happened more than 30 times—far more often than in the Arab
world.

Population trends could enhance these promising developments. A bulge
of better-educated young people of working age is entering the job
market and birth rates are beginning to decline. As the proportion of
working-age people to dependents rises, growth should get a boost. Asia
enjoyed such a “demographic dividend”, which began three decades ago and
is now tailing off. In Africa it is just starting.

Having a lot of young adults is good for any country if its economy
is thriving, but if jobs are in short supply it can lead to frustration
and violence. Whether Africa’s demography brings a dividend or disaster
is largely up to its governments.

More trade than aid

Africa still needs deep reform. Governments should make it easier to
start businesses and cut some taxes and collect honestly the ones they
impose. Land needs to be taken out of communal ownership and title
handed over to individual farmers so that they can get credit and
expand. And, most of all, politicians need to keep their noses out of
the trough and to leave power when their voters tell them to.

Western governments should open up to trade rather than just dish out
aid. America’s African Growth and Opportunity Act, which lowered tariff
barriers for many goods, is a good start, but it needs to be widened
and copied by other nations. Foreign investors should sign the
Extractive Industries Transparency Initiative, which would let Africans
see what foreign companies pay for licences to exploit natural
resources. African governments should insist on total openness in the
deals they strike with foreign companies and governments.

Autocracy, corruption and strife will not disappear overnight. But at
a dark time for the world economy, Africa’s progress is a reminder of
the transformative promise of growth.